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Highlights
- The Bank of Canada (BoC) said on Wednesday, March 2022, that it has decided to raise its interest rates to 0.5 per cent.
- This increase, which comes despite the ongoing economic tensions, is said to mark the first time Canada saw a hike in interest rates since 2018.
- The interest rate hike comes amid rising inflation in the country.
The Bank of Canada (BoC) said on Wednesday, March 2022, that it has decided to raise its interest rates to 0.5 per cent. This increase, which comes despite the ongoing economic tensions, is said to mark the first time Canada saw a hike in interest rates since 2018.
Canada’s interest rate had remained frozen at 0.25 per cent since the onset of the COVID-19 pandemic in 2020.
Also read: Will Bank of Canada hike interest rates sooner than expected?
The move to raise it now, however, does not come as a big surprise as a score of market experts had projected that the central bank is likely to start raising its key interest rate this year.
While the projections were somewhat reined in recently in the light of Russia’s attack on Ukraine, some analysts had expected BoC’s interest rates to be hiked by 25 basis points to 0.5 per cent.
Also read: Which sectors can be impacted as Russia attacks Ukraine?
Image credit: © 2022 Kalkine Media®
Bottomline
This hike in interest rates comes closely after Canada noted a significant economic growth of 6.7 per cent in 2021, which was stronger than BoC’s projection. This growth, the central bank pointed in its latest release, confirms that economic slack in the country “has been absorbed”.
The interest rate hike also comes amid rising inflation in the country, which rose past five per cent (5.1 per cent year-over-year) in January this year for the first time since September 1991.
The BoC is scheduled to announce its interest rates next on April 13, 2022.
